What are Three White Soldiers Candlesticks?
They are bullish candlestick pattern with long real bodies and small or no wicks. They are complex candlestick pattern made of three candlelines. On all the three days market opens at the low price of the day and closes at the high price of the day. They are bullish in nature and appear after the end of a down trend.
It has its name because of its resemblance to the three soldiers who are standing straight and erect, ready to conquer.
Three white soldiers typically appear at the beginning of an up trend. When the bearishness has waned out and when there is clear indication of the beginning of an up trend, there is an increased demand for the stock.
As the market opens traders wants to buy that particular stock. Through out the day people keep buying the stock. So the market opens at almost low of the day and closes at almost high of the day. This creates a long white candle with small or no wicks.
On the second day the market opens at the middle or at the high of the previous day's price range. The price rises with increased demand. Traders keep buying through out the day and at the end of the day the market closes at the high of the day.
This frenzy buying continues on the third day. So we will have three white candles stacked side by side with higher highs and higher lows.
Three White Soldiers is a complex candlestick pattern, which shows the strength of the advancing market. Just after the end of the bear phase it marks the beginning of the bull phase. Three white candles with high volume are very significant.
They clearly indicate the increased demand for the stock. The demand has continued consecutively for three days. When the demand is sustained for three days continuously, with three days of higher highs and higher lows it speaks for the internal strength of the market. It may be the beginning of a long bullish phase.
Three white candles can also be seen in an uptrend. This signifies increased momentum in the ongoing bull phase. The market continues to go up with may be a small pullback.
Three white soldiers can also be seen at end of an uptrend. If the white candlesticks are very extended, one should be cautious about an overbought market. This is the climax of the bull phase. Every one is interested in that stock. All are highly bullish. This is utilized by the smart money to unload their position.
These also contain three white candlesticks which have successive higher highs and higher lows. But they also have successive shorter and shorter real bodies and may be longer and longer shadows. These shorter bodies and longer wicks indicate loss of force in underlying bullishness of the market.
Although these do not indicate bearishness, one should become cautious to protect their long position. If this pattern is followed by a bearish confirmation candle, one should cover his long position and initiate a short position below the low of the confirmation candlestick, with high of the last two candles as the stop loss.
In the chart given below Three White Soldiers - Advance Block Pattern is followed by Bearish Engulfing Pattern confirming the end of the up trend. Later on down trend has ensued.
This pattern also consists of three white candles. The third of the three white candles has a short real body which may be accompanied with longer shadows. This is an indecision candle which stalls the bullishness of the market and alerts us to take action to protect the long position.
The frenzy bullishness may be used by the smart money to unload their long position. This increased supply stalls the price rise.
If this pattern is followed by a bearish confirmation candle, one should be on his toes to cover his long position and go short below the low of the confirmation candlestick, with high of the last two candles as the stop loss.
If there is a gap between second and third candle and followed by a bearish confirmation candle, it completes formation of evening star pattern which is a strong bearish pattern.
In the chart given below Three White Soldiers - Stalled Pattern is followed by a Bearish Harami Pattern confirming the end of the up trend. Later on down trend started which eventually increased in momentum with a huge gap down.
Counter part of this three white soldiers candlesticks pattern in a candle chart is Three Black Crows.
Read about it by clicking on the link below.
There are many more complex candlestick patterns used in stock analysis. Some of them are listed below. You may click on the name of each pattern listed bearish to learn and understand more about them.